Wednesday, February 12, 2014

Canada Kills Immigrant Investor Program, Refunding Pending Cases

It looks like the U.S. EB-5 Program is getting an unintentional boost from our neighbors to the North: Canada has just announced that it is ending its Investor Visa program, which has been extremely popular in China and proved an insurmountable adversary to the more encumbered, complex EB-5 investor visa offered by the United States. Calling the program a failure, Canada announced the closure of the program without much fanfare, stating as follows:

"To eliminate the existing backlog, which is diverting resources away from better performing economic immigration streams, the Government intends to return applications and refund associated fees paid by certain federal Immigrant Investor Program and Entrepreneur Program applicants..."

According to our Asia teams, this will represent a flood of refunds in mainland China and other East Asian nations. Canada's immigrant investor program, along with that of Australia, have both been far more popular than the U.S. EB-5 program at an international level for a number of reasons, not the least of which is that the U.S. program requires an "at risk" investment while the others assure that if a person invests, they WILL get residency, irrespective of any business success metrics. But there are other reasons which suggest this latest decision on Canada's part will push more investors towards the U.S. and EB-5: recent media coverage in both Australia and Canada have focused on an increasing distaste for migration, particularly from China. While the issue certainly does not smack of the violent xenophobia witnessed in recent years in Europe (esp. Germany and Greece), it is clear that both Australia and Canada have put away the welcome mat for foreign investors.

How will this impact U.S. EB-5? Hard to say, but given the continued flagrant violation of U.S. securities regulations by most Chinese migration agents and by many U.S. project promoters, EB-5 is hardly treated with trust in China. I expect that those projects with a legacy of integrity, whether large or small, will continue to draw investors from China at a strong rate. But the big winners could the passport programs from St. Kitts or the very popular Portuguese and Greek residency programs currently in the market.

If you were planning on Canadian direct investment or will be affected by the closure of the program, write me and I'll be happy to chat with you and help you find the best option for your particular situation. While we continue to market the final stage of the Lake Point EB-5 project, I will never recommend anything which is not in a client's best interest and the fact remains that for very high net worth individuals, U.S. residency is NOT the best option.